Commerzbank Is Said to Start Sale of $120 Million Hungary Unit

(Bloomberg) -- Commerzbank AG is kicking off the sale of its banking business in Hungary, according to people familiar with the matter, as its new chief executive officer embarks on a plan to cut costs and withdraw from non-core countries.

The German lender’s Hungarian unit could be valued at about 100 million euros ($119 million) in any sale, the people said. The business could attract interest from Belgium’s KBC Group NV and Raiffeisen Bank International AG of Austria, the people said, asking not to be identified discussing confidential information.

Deliberations are in the early stages and the asset is attracting both national and international suitors, one person said. In March, Hungary’s largest lender OTP Bank said it was looking into a potential purchase of Commerzbank’s operations in the country.

A representative for KBC said the bank was always interested in bolt-on opportunities in core markets, including Hungary, and declined to comment on specific targets. A representative for Commerzbank declined to comment, while a spokesperson for Raiffeisen didn’t immediately provide comment.

Shortly after taking over at the helm of Commerzbank earlier this year, CEO Manfred Knof presented a four-year plan to slash costs and put profitability ahead of growth. The bank has identified 15 foreign locations where operations will be closed or sold as part of the effort, including Brazil, Belgium, Hungary and Luxembourg.

Commerzbank’s Hungarian unit made a net profit of 1.2 billion forint ($4 million) last year, according to the group’s annual report.

Other European banks, including Deutsche Bank AG and HSBC Holdings Plc, have been selling out of peripheral geographies as they look to steady their finances and become more profitable entities.

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